A conviction-based global portfolio of around 80-100 companies that we believe are attractively valued with prospects for improving earnings growth. We invest across the value spectrum, seeking to deliver positive excess returns regardless of which value substyle is currently favoured by the market.

The coronavirus pandemic is currently creating tremendous uncertainty in equity markets. We continue to concentrate on a bottom-up approach, looking for the best relative value ideas where market uncertainty has caused what we believe to be an unwarranted decoupling from fundamental intrinsic value. Given our robust research platform and collective experience, we are confident in our ability to find these unique opportunities before their potential for substantial prosperity becomes obvious to other investors.

The English language commentary is available, with English language available at a later stage

The coronavirus pandemic is currently creating tremendous uncertainty in equity markets. We continue to concentrate on a bottom-up approach, looking for the best relative value ideas where market uncertainty has caused what we believe to be an unwarranted decoupling from fundamental intrinsic value. Given our robust research platform and collective experience, we are confident in our ability to find these unique opportunities before their potential for substantial prosperity becomes obvious to other investors.

The current equity environment is characterised by tremendous uncertainty regarding the likely human and economic impact of the coronavirus pandemic. Even amid the pronounced market sell-off in response to the global spread of the coronavirus and government actions to contain its spread, growth stocks have continued to outperform value stocks. Financial companies face a further extended period of low rates, as well as recessionary conditions triggered by global lockdowns. Meanwhile, the energy sector suffered amid the double whammy of low demand and over-supply of oil, which led to an implosion of oil prices. In addition, liquidity and leverage pressures caused concerns, which disproportionately weigh upon value investments.

�

The silver lining for value investors: Valuation dispersions are now at almost unprecedented levels across regions and sectors, resulting in a very high level of opportunities. As we enter a recovery period over the next 12 to 18 months this should be a positive backdrop for value investing. Any change in the market's longer-term prognosis for inflation and interest rates should similarly be very supportive.

�

In the U.S., the government has passed a record-setting USD 2 trillion stimulus package, nearly 10% of its gross domestic product (GDP). Meanwhile, the Federal Reserve acted rapidly to inject a massive amount of liquidity into markets hoping to instill a floor in bond pricing and prevent a liquidity crisis. For now, the extreme measures appear to be alleviating some of the pain as credit markets have shown signs of stabilization. However, it remains to be seen if these measures will be enough to get markets through this crisis. Within the market dislocation, we are finding opportunities in well-run companies, particularly those with more cyclical characteristics.

�

European nations, particularly Spain and Italy, were hit hard by the spread of the coronavirus during the quarter and lockdowns are now widespread across the Continent. Fiscal stimulus measures are being rolled out and monetary policy remains accommodative. European markets have been among the worst performers this year, and we are able to find well-managed companies with particularly inexpensive valuations.

�

In Asia, while China was the origin of the outbreak, lockdown measures began to be eased towards the end of the quarter and hope for some normalization helped to improve investor sentiment. We found opportunities to add to Chinese companies earlier in the quarter, although we may look to trim positions here should they begin to appear more fairly valued. In Japan, the government has been relatively slow to announce restrictive lockdown measures. Prime Minister Shinzo Abe announced one of the largest stimulus packages worldwide, including approximately 7% of GDP to support the economy. As for other major economies, a weak global backdrop remains a risk to Japan's outlook, especially given the importance of its export sector. Crucially for investors such as ourselves, corporate governance has been improving in recent years, with companies becoming more shareholder friendly, and we continue to identify stocks with compelling valuations befitting of our value perspective.

�

We continue to concentrate on the bottom-up view, with a focus on selecting companies with strong free cash flow generation not yet fully appreciated by the market and with the scope to increase shareholder returns. We are finding many pockets of controversy where fundamentally sound, well-run businesses face unwarranted investor skepticism. Given our robust research platform and collective experience, we are confident in our ability to find these unique opportunities before their potential for substantial prosperity becomes obvious to other investors.�

Strategy

Fund Summary

We employ a relative value approach that looks holistically across the value spectrum to identify companies with durable free cash flows that are not fully appreciated by the market. We aim to maintain a core portfolio of quality companies but will also pursue attractive risk/reward opportunities in out-of-favour cyclical companies and deep-value turnaround situations.

Indicative Benchmark

Effective July 1, 2018, the “net” version of the indicative benchmark replaced the “gross” version of the indicative benchmark. The “net” version of the indicative benchmark assumes the reinvestment of dividends after the deduction of withholding taxes applicable to the country where the dividend is paid; as such, the returns of the new benchmark are more representative of the returns experienced by investors in foreign issuers. Historical benchmark performance has been restated accordingly.

01 July 2018

Indicative Benchmark

Effective July 1, 2018, the “net” version of the indicative benchmark replaced the “gross” version of the indicative benchmark. The “net” version of the indicative benchmark assumes the reinvestment of dividends after the deduction of withholding taxes applicable to the country where the dividend is paid; as such, the returns of the new benchmark are more representative of the returns experienced by investors in foreign issuers. Historical benchmark performance has been restated accordingly.

Global equities rebounded in April. Investors were enthused in part by some encouraging trends in global coronavirus infection and hospitalisation rates, and rising hopes that stay-at-home orders might soon be eased. The more positive sentiment overcame concerns caused by record downturns in global economic data and the plunge in oil prices into negative territory. The sectors which had seen the most significant declines in the previous two months fared best in April, with energy and consumer discretionary names outperforming. Despite valuation spreads reaching record levels, value stocks continued to underperform growth stocks during the month. At the portfolio level, stock selection within the industrials and business services, communication services, and real estate sectors held back returns, while our underweight position in consumer discretionary also hurt. By contrast, our choice of securities within materials, health care and information technology served performance well. In particular, shares in a gold royalty company and a diversified base metals producer both saw strong double-digit gains in their share prices, following sharp sell-offs in March.

The English language commentary is available, with English language available at a later stage

Global equities rebounded in April. Investors were enthused in part by some encouraging trends in global coronavirus infection and hospitalisation rates, and rising hopes that stay-at-home orders might soon be eased. The more positive sentiment overcame concerns caused by record downturns in global economic data and the plunge in oil prices into negative territory. The sectors which had seen the most significant declines in the previous two months fared best in April, with energy and consumer discretionary names outperforming. Despite valuation spreads reaching record levels, value stocks continued to underperform growth stocks during the month. At the portfolio level, stock selection within the industrials and business services, communication services, and real estate sectors held back returns, while our underweight position in consumer discretionary also hurt. By contrast, our choice of securities within materials, health care and information technology served performance well. In particular, shares in a gold royalty company and a diversified base metals producer both saw strong double-digit gains in their share prices, following sharp sell-offs in March.

As developments around the coronavirus outbreak evolved, the market pull-back created many opportunities, particularly in out-of-favor cyclicals. Conversely, some defensive names that outperformed appeared to be less attractively valued. In light of the sell-off, our strategy was to upgrade the portfolio, selling down defensives and buying cyclical names that had seen substantial price drops and where we believe there is significant potential upside. For example, we bought a new position in SSP, a UK-based operator of branded catering and retail units in airports and railway stations, whose trade volumes were down around 80% as a result of containment restrictions.

�

Over the course of the first quarter, we made a number of adjustments to our individual holdings within sectors. We reduced the extent of our overweight to financials. We raised the portfolio's exposure to the communication services sector, initiating a position in Facebook which we view as a quality cyclical and a play on advertising spend. We started adding to our energy exposure as we believed that the price of oil had fallen to an unsustainable level, although we are mindful that in the short-term the price could fall further. Within the industrials space, we made a number of switches to our positions.

�

On a country basis, we began raising the weighting to China as the country became the first to restart its economy and ease travel restrictions following the coronavirus outbreak. For example, we initiated a position in Trip.com, an online travel agent in the country.

�

Our major overweight sector positions at the end of March were utilities, financials, and energy. The largest underweight sector positions included IT, consumer discretionary, and consumer staples.

Financials

As the quarter began, the portfolio had a substantial overweight to financials. Over the quarter we reduced our exposure but remained overweight. We did this through reducing our position in high quality names such as J.P. Morgan Chase and using part of the proceeds of this sale to build positions in 'bombed-out' insurers and capital markets players.��

�

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Health Care

As the quarter began, the portfolio had a modest underweight to health care names. We made a number of switches to our holdings, leaving us with a small overweight position. We initiated positions in Novartis and UnitedHealth, funding this in part through the elimination of our position in Pfizer.

�

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Energy

We raised the portfolio's exposure to energy as oil prices had reached levels that were below the marginal cost of production and because we felt they were unsustainably low beyond the short term. We topped up existing holdings in a number of names, including Pioneer, and built a new position in Chevron.

We partially funded these purchases by selling out of BP, the British integrated oil and gas company. The company was hit hard by the drop in the oil price and over the quarter management announced a reduction in capital expenditure and reduced production guidelines. This potentially increases the risk of the company not reaching its divestment targets, which would impact cashflow.

Industrials and Business Services

We retained a modest overweight within industrials and business services but we made a number of changes to our holdings within the sector. We eliminated our holding in Compania de Distribucion Integral Logista and used the proceeds to fund a position in Toshiba.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

The English language commentary is available, with English language available at a later stage

As developments around the coronavirus outbreak evolved, the market pull-back created many opportunities, particularly in out-of-favor cyclicals. Conversely, some defensive names that outperformed appeared to be less attractively valued. In light of the sell-off, our strategy was to upgrade the portfolio, selling down defensives and buying cyclical names that had seen substantial price drops and where we believe there is significant potential upside. For example, we bought a new position in SSP, a UK-based operator of branded catering and retail units in airports and railway stations, whose trade volumes were down around 80% as a result of containment restrictions.

�

Over the course of the first quarter, we made a number of adjustments to our individual holdings within sectors. We reduced the extent of our overweight to financials. We raised the portfolio's exposure to the communication services sector, initiating a position in Facebook which we view as a quality cyclical and a play on advertising spend. We started adding to our energy exposure as we believed that the price of oil had fallen to an unsustainable level, although we are mindful that in the short-term the price could fall further. Within the industrials space, we made a number of switches to our positions.

�

On a country basis, we began raising the weighting to China as the country became the first to restart its economy and ease travel restrictions following the coronavirus outbreak. For example, we initiated a position in Trip.com, an online travel agent in the country.

�

Our major overweight sector positions at the end of March were utilities, financials, and energy. The largest underweight sector positions included IT, consumer discretionary, and consumer staples.

Financials

As the quarter began, the portfolio had a substantial overweight to financials. Over the quarter we reduced our exposure but remained overweight. We did this through reducing our position in high quality names such as J.P. Morgan Chase and using part of the proceeds of this sale to build positions in 'bombed-out' insurers and capital markets players.��

�

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Health Care

As the quarter began, the portfolio had a modest underweight to health care names. We made a number of switches to our holdings, leaving us with a small overweight position. We initiated positions in Novartis and UnitedHealth, funding this in part through the elimination of our position in Pfizer.

�

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Energy

We raised the portfolio's exposure to energy as oil prices had reached levels that were below the marginal cost of production and because we felt they were unsustainably low beyond the short term. We topped up existing holdings in a number of names, including Pioneer, and built a new position in Chevron.

We partially funded these purchases by selling out of BP, the British integrated oil and gas company. The company was hit hard by the drop in the oil price and over the quarter management announced a reduction in capital expenditure and reduced production guidelines. This potentially increases the risk of the company not reaching its divestment targets, which would impact cashflow.

Industrials and Business Services

We retained a modest overweight within industrials and business services but we made a number of changes to our holdings within the sector. We eliminated our holding in Compania de Distribucion Integral Logista and used the proceeds to fund a position in Toshiba.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

In April, we added to some positions in sectors which had fared the worst in the first quarter, such as consumer discretionary, materials, energy, and financials. We are favouring more cyclical companies and “deep value” stocks as we believe that their valuations have become more appealing. We are always mindful, however, of the degree of financial and operational leverage of companies in the current environment. We aim to maintain a balance of exposures across the value spectrum so that we can look to deliver performance across a range of investment environments.

The English language commentary is available, with English language available at a later stage

In April, we added to some positions in sectors which had fared the worst in the first quarter, such as consumer discretionary, materials, energy, and financials. We are favouring more cyclical companies and “deep value” stocks as we believe that their valuations have become more appealing. We are always mindful, however, of the degree of financial and operational leverage of companies in the current environment. We aim to maintain a balance of exposures across the value spectrum so that we can look to deliver performance across a range of investment environments.

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

The English language commentary is available, with English language available at a later stage

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

As developments around the coronavirus outbreak evolved, the market pull-back created many opportunities, particularly in out-of-favor cyclicals. Conversely, some defensive names that outperformed appeared to be less attractively valued. In light of the sell-off, our strategy was to upgrade the portfolio, selling down defensives and buying cyclical names that had seen substantial price drops and where we believe there is significant potential upside. For example, we bought a new position in SSP, a UK-based operator of branded catering and retail units in airports and railway stations, whose trade volumes were down around 80% as a result of containment restrictions.

�

Over the course of the first quarter, we made a number of adjustments to our individual holdings within sectors. We reduced the extent of our overweight to financials. We raised the portfolio's exposure to the communication services sector, initiating a position in Facebook which we view as a quality cyclical and a play on advertising spend. We started adding to our energy exposure as we believed that the price of oil had fallen to an unsustainable level, although we are mindful that in the short-term the price could fall further. Within the industrials space, we made a number of switches to our positions.

�

On a country basis, we began raising the weighting to China as the country became the first to restart its economy and ease travel restrictions following the coronavirus outbreak. For example, we initiated a position in Trip.com, an online travel agent in the country.

�

Our major overweight sector positions at the end of March were utilities, financials, and energy. The largest underweight sector positions included IT, consumer discretionary, and consumer staples.

Financials

As the quarter began, the portfolio had a substantial overweight to financials. Over the quarter we reduced our exposure but remained overweight. We did this through reducing our position in high quality names such as J.P. Morgan Chase and using part of the proceeds of this sale to build positions in 'bombed-out' insurers and capital markets players.��

�

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Health Care

As the quarter began, the portfolio had a modest underweight to health care names. We made a number of switches to our holdings, leaving us with a small overweight position. We initiated positions in Novartis and UnitedHealth, funding this in part through the elimination of our position in Pfizer.

�

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Energy

We raised the portfolio's exposure to energy as oil prices had reached levels that were below the marginal cost of production and because we felt they were unsustainably low beyond the short term. We topped up existing holdings in a number of names, including Pioneer, and built a new position in Chevron.

We partially funded these purchases by selling out of BP, the British integrated oil and gas company. The company was hit hard by the drop in the oil price and over the quarter management announced a reduction in capital expenditure and reduced production guidelines. This potentially increases the risk of the company not reaching its divestment targets, which would impact cashflow.

Industrials and Business Services

We retained a modest overweight within industrials and business services but we made a number of changes to our holdings within the sector. We eliminated our holding in Compania de Distribucion Integral Logista and used the proceeds to fund a position in Toshiba.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

The English language commentary is available, with English language available at a later stage

As developments around the coronavirus outbreak evolved, the market pull-back created many opportunities, particularly in out-of-favor cyclicals. Conversely, some defensive names that outperformed appeared to be less attractively valued. In light of the sell-off, our strategy was to upgrade the portfolio, selling down defensives and buying cyclical names that had seen substantial price drops and where we believe there is significant potential upside. For example, we bought a new position in SSP, a UK-based operator of branded catering and retail units in airports and railway stations, whose trade volumes were down around 80% as a result of containment restrictions.

�

Over the course of the first quarter, we made a number of adjustments to our individual holdings within sectors. We reduced the extent of our overweight to financials. We raised the portfolio's exposure to the communication services sector, initiating a position in Facebook which we view as a quality cyclical and a play on advertising spend. We started adding to our energy exposure as we believed that the price of oil had fallen to an unsustainable level, although we are mindful that in the short-term the price could fall further. Within the industrials space, we made a number of switches to our positions.

�

On a country basis, we began raising the weighting to China as the country became the first to restart its economy and ease travel restrictions following the coronavirus outbreak. For example, we initiated a position in Trip.com, an online travel agent in the country.

�

Our major overweight sector positions at the end of March were utilities, financials, and energy. The largest underweight sector positions included IT, consumer discretionary, and consumer staples.

Financials

As the quarter began, the portfolio had a substantial overweight to financials. Over the quarter we reduced our exposure but remained overweight. We did this through reducing our position in high quality names such as J.P. Morgan Chase and using part of the proceeds of this sale to build positions in 'bombed-out' insurers and capital markets players.��

�

J.P. Morgan Chase: The U.S.-based bank represents an even mix of retail and wholesale businesses. While it appears to be a long-term scale winner trading at a fair premium, less idiosyncratic drivers from here make the bank increasingly exposed to industry headwinds.

Charles Schwab: We purchased shares in the savings and loan holding company, which engages in the provision of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company is a premier franchise that stands to gain from the eventual increase in interest rates and is well-positioned versus its competitors. In the long-term, we believe that the company can deliver durable earnings growth as it continues to gather assets, drive scale efficiencies, and grow its bank with low cost brokerage sweep deposits.

Health Care

As the quarter began, the portfolio had a modest underweight to health care names. We made a number of switches to our holdings, leaving us with a small overweight position. We initiated positions in Novartis and UnitedHealth, funding this in part through the elimination of our position in Pfizer.

�

Novartis: We initiated a position in this Swiss multinational healthcare company, which is engaged in the development, manufacture and sale of pharmaceutical products. We expect the company to grow net sales at an average rate of 5% over the next five years. Strong margin expansion driven by positive mix effects, cost-saving initiatives and share repurchases should drive average earnings growth over the same period. ���

�

UnitedHealth: We initiated a holding in the well-diversified healthcare services company, which is based in the U.S. The company looks well-placed to weather the current crisis and to remain undisrupted by the outcome of the U.S. election later this year. We expect the company to achieve low-teens earnings growth in 2020-2023 as a result of improving Medicare performance, continued growth in the Medicaid businesses, an exit of the exchanges business, and a disruption of peers due to deal-related distraction.

�

�

Pfizer: We eliminated our position in order to invest in higher-conviction names in this space, which we believe offer higher innovation potential. We believe that management has damaged their credibility somewhat through poor business development decisions and weak judgment on guidance.

Energy

We raised the portfolio's exposure to energy as oil prices had reached levels that were below the marginal cost of production and because we felt they were unsustainably low beyond the short term. We topped up existing holdings in a number of names, including Pioneer, and built a new position in Chevron.

We partially funded these purchases by selling out of BP, the British integrated oil and gas company. The company was hit hard by the drop in the oil price and over the quarter management announced a reduction in capital expenditure and reduced production guidelines. This potentially increases the risk of the company not reaching its divestment targets, which would impact cashflow.

Industrials and Business Services

We retained a modest overweight within industrials and business services but we made a number of changes to our holdings within the sector. We eliminated our holding in Compania de Distribucion Integral Logista and used the proceeds to fund a position in Toshiba.

Toshiba: We built a position in the Japanese conglomerate which engages in the manufacture and sale of electronic and electrical products. Management have recently refocused their attention to the most profitable areas of the business, including a semi-conductor company in which it owns a 40% stake. We found an attractive entry point to initiate a holding in the stock.

Indicative Benchmark Data Source: MSCI. MSCI and its affiliates and third party sources and providers (collectively, “MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

Source for performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures. Past performance is not a reliable indicator of future performance.

Daily performance data is based on the latest available NAV.

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors and via www.troweprice.com.

Please note that the Fund typically has a risk of high volatility.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

Attribution Data: Analysis represents the total performance of the portfolio as calculated by the FactSet attribution model and is inclusive of other assets that that will not receive a classification assignment in the detailed structure shown. Returns will not match official T. Rowe Price performance because FactSet uses different exchange rate sources and does not capture intra-day trading. Performance for each security is obtained in the local currency and, if necessary, is converted to U.S. dollars using an exchange rate determined by an independent third party. Figures are shown with gross dividends reinvested.

The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc, ("MSCI") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and is licensed for use by [Licensee]. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or impIied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any or such standard or classification, Without limiting any or the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

1 Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.

Citywire - where the Fund manager is rated by Citywire the rating is based on the manager's 3 year risk adjusted performance.

Historical data may not be a reliable indication of the future profile of the fund. The risk and reward profile shown is not guaranteed to remain unchanged and may shift over time. The lowest category does not mean a risk-free investment.

The Average Coupon, Maturity, Duration & Credit Quality measures are all calculated on a snapshot basis as of the stated month end, and consist of the weighted average details of the underlying securities of the fund.

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